Q$1$ Functional budgets preparation

Marble Ltd manufactures two products and is in the process of preparing its budgets for the next quarter $($April$,$ May and June$).$ To date the following budgeted information has been compiled:

$\backslash$table$[[,$Product A$],[$Budgeted sales $($units$),3,000],[$April$,5,500],[$May$,3,500],[$June$,4,000],[$July$,]]$

Budgeted selling price per unit:

$80$

$80\%$ of sales are on credit. Credit terms are strictly $30$ days. $1\%$ of all sales will result in bad debt. Trade receivables outstanding at ${31}^{st}$ March were $65,000($which are all collectable$).$

The standard material for each product is as follows:

Product A

Material X $($kilogrammes$)$

$3$

Material planner has provided the following information:

$\backslash$table$[[,$Material X Product A$,],[$Opening inventory $($April$),1,000kg,1,200$ units$],[$Closing inventory $($June$),1,800kg,],[$Purchase price $($per $2\mathrm{.}50,,],[$kilogramme$),,]]$

All purchases are paid in the same month to the supplier. Management have decided closing stock at the end of each month should be as follows:

Raw materials: $,10\%$ of the next month's usage

Finished goods: $,10\%$ of the next month's sales.

Overheads

Fixed overheads are estimated at $5,000$ per month and are paid in the month they were incurred. $1,500$ of this amount relates to depreciation.

Insurance of $12,500$ is due to be paid in April.

Capital Expenditure

April: Computer

$148,000$

May: Delivery van $280,000$

June: $,$ Additional Delivery van $230,000$

Corporation Tax of $35,900$ is due to be paid in May

The opening bank balance is $43,500$ overdrawn.

Required:

i$.$ Prepare the following budgets for April, May and June:

$($a$)$ Sales Budget

$($b$)$ Production Budget in units

$($c$)$ Materials Usage Budget

$($d$)$ Materials Purchases Budget

ii$.$ Prepare the Cash Budget for the $3$ months period.

iii. Recommend to the management of Marble ltd$,$ three ways of improving their cash position.